South African strike not denting budget forecast yet

September 16, 2012|Reuters

(SIPHIWE SIBEKO Reuters, REUTERS)

STOCKHOLM (Reuters) - South Africa sees no need yet to revise the outlook for its fiscal performance in its 2012 budget plan even if there has been revenue loss due to problems in the mining industry, Finance Minister Pravin Gordhan said on Sunday.

But in an interview in the Swedish capital ahead of a conference on Monday, Gordhan said the mining problems needed to end as soon as possible and he hoped increased security measures would allow for successful negotiations between employers and employees.

South Africa's platinum mine industry has been hit by a wildcat strike at Lonmin, prompted by demands for higher pay. That has spread to other mining companies. Lonmin is to resume talks on Monday with the strikers.

Gordhan said the government had already forecast that economic growth for the year would be below the current 2.7 percent forecast, mainly due to the European debt crisis.

He also noted the economy rose 3.2 percent in the second quarter after 2.7 percent growth in the previous three months.

"What we might see in the third quarter is a dip again in the growth numbers and also an impact on the potential that there was for increased employment within the sector as well," he told Reuters and Swedish news agency TT in an interview.

"The revenue loss is there," he said of the strike, but added: "At this stage our budget February 2012 numbers stand."

He said he hoped the mining problems would be short-lived.

"The period in which we have this instability needs to be confined, to the extent that it is possible, and at the same time we require this collective commitment to resolve the issues," he said.

Gordhan played down the idea the government would help the mine firms finance more generous terms for their workers.

"We will cross that bridge when we get to it, but it certainly hasn't appeared on our agenda at the moment. The mining industry is not on its knees," he added.

Gordhan said all actors in the dispute agreed the strike needed to end as soon as possible.

He said the government had decided on Friday that the police, and army if needed, would be more forceful in trying to stop the spread of what he called intimidation in the industry.

"Having a stable climate where there is no violence and intimidation is going to be an important context within which all of the others things (holding talks to end the dispute) are going to happen," he added.

"Once we stabilize the situation the players will sit around the table and attend to those issues and, importantly, send a message out to the world that South Africa is still open for business and still remains a very important and useful place for foreign investments and to local investment," he said.